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BUYING a home in Wales is, on average, 7% cheaper than renting, according to latest figures from the Halifax.

The bank's Buying vs. Renting Review for June found that the average monthly costs for those buying a home in Wales was PS455. In comparison the average cost for those renting was PS490.

Across the UK the study found that the average cost of buying a home is now almost a fifth lower than renting. The average monthly costs associated with buying a three bedroom house stood at PS600 in June 2012; PS132 (or 18%) lower than the typical monthly rent of PS732 paid on the same property type.

In 2011, the monthly cost associated with home buying was PS78 (11%) lower than renting. Over the past year, buying costs have dropped by 3%, while the cost of renting has increased by 5%.

In contrast, in 2008 the average home buying costs (PS1,048) were 45% (or PS324) more than the average monthly rent paid (PS724).

The study suggests the substantial improvement in the affordability of buying relative to renting largely reflects a 43% drop in home buying costs since 2008; caused by a marked fall in both house prices and mortgage rates.

The average mortgage rate for a new borrower has fallen by more than two percentage points over the last four years from an average of 5.91% in June 2008 to 3.82% in June 2012.

Over the same period, the typical UK house price has decreased by a tenth. In contrast, the typical rent paid has risen by 11% (PS72) since 2010.

The study found that monthly home buying costs currently account for less than a third (29%) of average UK disposable income, down from over half (54%) in 2008.

Home buying costs in 2012 also account for a smaller proportion of average UK disposable income than rental payments (29% against 35%).

However, despite the improvement in affordability, the number of buyers in the UK housing market has fallen significantly over the last four years. There were 535,200 buyers (with a mortgage) in the 12 months to June 2012; a third lower than the same period in 2008 (793,600).

More than half the respondents to the survey highlighted the challenge of raising a deposit (58%) and concerns about job security (56%) as the main barriers to buying a home. Home buyers - both first-time buyers and those moving up the property ladder - put down an average deposit of PS40,526 in June 2012, equivalent to a quarter (25%) of the property price. The average deposit required has risen by 68% (PS16,387) over the past decade from PS24,140 in June 2002.

Martin Ellis, housing economist at Halifax, said: "It is clearly encouraging that there has been a significant decline in the cost of buying a home for those able to enter the housing market since 2008.

"The improvement is due to a combination of lower mortgage rates and declining house prices.

"In contrast, market conditions for renters have deteriorated as rents have risen in the past two years."